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July 3, 2025

By Charles Skinner, AAFMAA Mortgage Services LLC (AMS)

 

Military families know that Basic Allowance for Housing (BAH) helps cover the cost of living near a duty station, but there’s a lot more to it than that. When used strategically, BAH can be a powerful tool for building long-term wealth.

BAH is a tax-free stipend provided to most active duty servicemembers when government quarters are not available, they’re married, or above a certain rank. It’s calculated based on local civilian housing costs and includes rent and essential utilities like electricity and water. It does not account for other household expenses like food, transportation or childcare. 

On average, BAH is around $2,000 per month, although it varies depending on location, rank, and dependency status.

Related: Top 8 Questions From Military Homebuyers (and the Answers)

 

Understanding How BAH Works

Each year, the Department of Defense collects housing data from nearly 300 military housing areas, including those in Alaska and Hawaii. They analyze factors such as:

  • Median rent prices
  • Utility costs
  • Housing types and bedroom count
  • Local market trends

This information determines BAH rates by rank and whether a servicemember has dependents. While BAH typically covers about 95% of expected housing costs, the remaining 5% is meant to come out of pocket. But by planning ahead, especially in certain markets, it’s possible to stretch that allowance much further.

If you receive orders outside the continental U.S., BAH is replaced by the Overseas Housing Allowance (OHA). Unlike BAH, OHA reimburses actual rental expenses up to a capped amount and includes utility allowances and a one-time move-in payment. It does not offer the same flexibility to profit from spending less on housing, but it helps cover local market realities.

Related: Understanding APR: A Guide for Military Homebuyers

 

Using BAH to Qualify for a Mortgage

One of the most valuable aspects of BAH is that it can be used as qualifying income when applying for a mortgage. Because BAH is a consistent, reliable stipend provided by the Department of Defense, lenders often count it alongside base pay to assess a servicemember's borrowing power.

This means soldiers may qualify for larger loans than expected, especially when using VA Home Loan benefits that require no down payment. When paired with low-interest military lending products, BAH allows even junior enlisted members to enter the housing market earlier in their careers.

At AMS, we work with servicemembers every day to ensure BAH is accurately reflected in loan applications, helping them maximize their purchasing power while staying within safe and sustainable budgets.

A $2,000 monthly BAH can comfortably cover a mortgage of around $300,000, depending on interest rates and loan terms. In places like Fort Bragg, where property values range between $250,000 and $350,000, this creates a real chance for servicemembers to own a home, rather than pay rent.

Even junior enlisted soldiers are starting to take advantage of this opportunity. Many opt to purchase modest homes under $250,000, allowing them to save a portion of their BAH while gaining equity. Special Forces personnel and financially educated soldiers are leading the way, often buying homes at each duty station and renting them out after a PCS move. This creates a portfolio of income-generating properties over time.

Related: Do’s and Don’ts for a Smoother Mortgage Process

 

The PCS Challenge: BAH Is Portable, Mortgages Are Not

Every time a servicemember receives Permanent Change of Station (PCS) orders, their BAH rate resets based on their new location. Sometimes it shifts by only a few dollars. Other times, such as making a move from Offutt AFB in Nebraska to Pearl Harbor-Hickam in Hawaii could mean a significant increase, and a much higher cost of living.

If you’ve bought a home at your previous duty station and your new BAH is lower, you’ll need to make decisions quickly:

  • Can you rent the home at a profit or at least break even?
  • Will your BAH at the new location support both your old mortgage and new rent or mortgage?
  • Do you have savings to help bridge the gap?

At AAFMAA Mortgage Services LLC (AMS), we help servicemembers work through these questions, offering guidance, calculators and real-time BAH data to support their decisions.

 

Educating the Force: Empowering Smart Homeownership

As awareness grows, more servicemembers are discovering how to turn BAH into a financial asset. BAH was designed to offset the challenges of military life. But with the right education and planning, it can become the cornerstone of financial growth. 

Additionally, I’ll be teaching in-person classes at Fort Bragg this year to walk soldiers through the benefits of using their housing allowance to build wealth. We’ll explore:

  • How to use BAH to qualify for a mortgage
  • What kinds of properties are BAH-friendly
  • Building a real estate portfolio over multiple duty stations
  • Managing properties while deployed or PCSing

We believe every servicemember should understand how to turn BAH into an opportunity. Whether you’re new to the military or preparing for your third PCS, our Military Mortgage Advisors can help you make informed, confident choices.

 

We’re Here to Help

Whether you’re thinking about buying, ready to start home-shopping in earnest, or considering a refinance, one of our Military Mortgage Advisors, a licensed mortgage loan originator, will be happy to provide you with an honest and fair comparison of your mortgage options, including a wide range of affordable mortgages designed to meet your needs.

Ensuring Armed Forces Mutual Members obtain the best mortgage possible is our mission. Get your free mortgage assessment today or give us a call at 844-422-3622!

 

Charles Skinner is the Sales Manager for AMS’s Cary, NC, branch. He proudly served six years in the U.S. Army as a sniper in the 82nd Airborne Division. His military experience has instilled in him a commitment to excellence, attention to detail, and a deep understanding of the unique needs of Veterans and military personnel. As the Sales Manager in Cary, Charles leads a team of Military Mortgage Advisors who guide servicemembers and Veterans through the intricacies of utilizing their VA Home Loan benefits. To learn more about BAH, his classes at Fort Bragg, and VA Home Loans you can contact Charles at cskinner@amshomeloans.com.